CORRECTED-UPDATE 1-Kerry to stress need for Egyptian consensus for IMF deal -U.S. official

Reuters Staff

3 Min Read

(Corrects minister’s name in sixth paragraph)

By Arshad Mohammed

CAIRO, March 2 (Reuters) - U.S. Secretary of State John Kerry plans to stress the importance of Egypt reaching an IMF agreement and achieving political consensus for painful economic reforms, a U.S. official said on Saturday.

Speaking shortly before Kerry arrived in Cairo for a two-day visit, the official said if Egypt could agree on a $4.8 billion loan from the IMF, this would bring in other funds from the United States, European Union and Arab countries.

However, the official said Kerry believed Egypt needed to increase tax revenues and reduce energy subsidies, measures that are likely to prove highly unpopular with Egyptians who are struggling during the country’s economic crisis.

“His basic message is it’s very important to the new Egypt for there to be a firm economic foundation,” the official told reporters as Kerry flew to Cairo.

“In order for there to be agreement on doing the kinds of economic reforms that would be required under an IMF deal there has to be a basic political ... agreement among all of the various players in Egypt,” the official said on condition of anonymity.

Egypt said on Thursday it would invite a team from the International Monetary Fund to reopen talks the loan - which was agreed in principle last November but put on hold at Cairo’s request during street violence the following month - and the Investment Minister Osama Saleh expressed hope that a deal could be done by the end of April.

Egypt’s foreign currency reserves have fallen to not much more than a third of their level before the 2011 overthrow of Hosni Mubarak as the nation’s crisis deepens.

However, the hopes for political consensus between the ruling Islamaists and opposition parties seem slim. Liberal and leftist opposition parties have announced a boycott of parliamentary elections, scheduled for April to June, over a new constitution produced by an Islamist-dominated assembly and over other grievances.

Nevertheless, Kerry will stress the need for agreement on reform across the political spectrum on reforms that are likely to be unpopular and winning approval in the Shura Council, Egypt’s upper house of parliament.

“What they need to do is ... things like increasing tax revenues, reducing energy subsidies, making clear what the approval process will be to the Shura council for an IMF agreement, that kind of thing,” said the official. (Reporting by Arshad Mohammed, editing by Marwa Awad and David Stamp)